Adrian Mastracci, portfolio manager at KCM Wealth Management, says “Investors who concentrate on these six simple stepping stones will easily fix the foundations."

Vancouver, BC (July 9, 2007): The nest egg foundations may be in need of some fixing. Even during the good times. And it does not have to be a complicated exercise.

An unknown author once wrote, “Opportunities are never lost. Someone will take the one you miss.”

Nest eggs are often left lazily on their own for years with few checks and balances. Various events spring a little chaos on them. Like buying a muddle of 20 to 30 picks for no apparent reason.

Not to mention that we’ve recently lost some large companies to choose from, like Inco and Falconbridge. BCE is about to go private. Alcan is being courted. Others may be waiting in the wings.

Canada has about 60 large companies. A small pool to choose from. Especially for investors who seek dividend income and dividend growth.

Mid-2007 is an opportune time for a close examination. Markets are closing in on five years of upsides. A check of whether the investment plan is still working or in need of attention.

It’s prudent to take this opportunity. Six simple stepping stones mend the portfolio foundations into solid cornerstones. Especially for investors near or in retirement.

Investors should not make changes just for the sake of change. It’s wise to know where they are heading before sprucing up the precious nest egg.

Investment concentrations may be too high for comfort. Perhaps, some rebalancing makes sense. Emotions may be clouding decisions. A few good strategies can help immensely.

Here are my six simple stepping stones to fix the portfolio foundations:

Focus on what the nest egg is to provide in the long run. Confirm that personal goals are sensible and that the portfolio is on the right track. The investment advisors should ask the same questions.

Revisit the portfolio size required to provide the desired retirement income. Refresh the investment rate of return to reach those goals. This is the minimum portfolio yardstick. Not market performance.

2. Risk matters

Understanding investment risks brings common sense to the portfolio. Three major factors are the ability, willingness and need to incur the risks. Also, be mindful of investment quality versus yield. The reductions in yields during the past seven years make it tempting to sacrifice quality.

This is the tricky one. It’s wise to assume that some investments will disappoint and become terrible picks. Further, all the money doesn’t have to invested at once. Taking a year or two to complete the game plan is an acceptable approach.

3. Diversify widely

Diversification is the investor’s best friend. Asset mix decisions provide the greatest diversification. Geography is also important, so include some picks from outside the home borders. In addition, limit single investments, say a stock, to a maximum of 5% of total portfolio value.

Let’s be clear. It’s not prudent to bet the farm on the fortunes of a select few investments. No matter how rosy the prospects may appear. This could result in a seriously impaired game plan, particularly in providing retirement income. Lastly, be extra careful with the employer stock.

4. Pick the mix

Studies show that investment mix decisions have the biggest impact on portfolios of any single factor. Neither stock selection, nor market timing are even close. Focus both on capital preservation and long-term needs.

Investment mix is the combination of asset classes, like equities, bonds, cash and real estate. It's also about choices such as large and small companies, growth and value investing. Choose a sensible mix so that the holdings don't all move in the same direction.

5. Cut losses

Making portfolio selections is not about always being right. Part of investing is about coming to grips with the prospects of being wrong. Astute portfolio managers do admit to being wrong.

What really hurts portfolios the most is not incurring the losses. Rather, it's keeping them far too long. Be objective. Know when to fold and cut the losses early before they inflict heavy damage.

6. Cost tallies

Pay attention to all the costs of buying, holding and selling the investments. Particularly the ones that don't send invoices. The collection of expenses, layers of fees, front and back end costs can baffle.

All advisors should be asked the tough questions. Such as what they are paid from the investments, both initially and in the future. Their answers should flow easily.

Investors who concentrate on these six simple stepping stones will easily fix the foundations. A little shoring up of the portfolio.

There is no need to miss the opportunity. Part of the game plan for the precious financial house.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.